The following is a tale which may or may not end up on an episode of Jeremy Kyle (a very low-class version of Jerry Springer for non-UK readers). Hopefully it does as we’d all love to see Ralph Topping and Teddy Sagi slug it out on breakfast TV. If not, it’s still nice to imagine that scenario.
It looked like a match made in heaven. William Hill had one of the strongest brands in the UK gambling market as well as the financial stability to invest and possibly incur any short term, not that they were expecting any. But as already stated, they had struggled to capitalise on this in the online market. They represent the innocent young woman from a wealthy background, if you will, but with a strict and slightly stuffy father (Mr Topping).
Playtech therefore represent the womanizer who’s been around the block a bit but still retains an image as a slick and savvy operator. In addition, the suspicion that a ruthless streak lies beneath is never far away. Think Christian Bale in American Psycho but will less blood and murder.
For so long a big name in high society across in the UK, Hills had been the first to go online in 1998 when they launched their sportsbook. Initially results were promising. Why wouldn’t they be when you have the brand awareness already afforded to a name of such wealth and notoriety? It was when competing brands and those of new wealth began to hone their skills that Hills’ online efforts appeared less and less impressive.
Having said that, their operating profit in the interactive sector did increase consistently year on year from £9.2 million in 2001 to £20.5 million in 2002 and on to £37.1 million in 2003 to £51.7 million in 2004. This growth was good but hardly outstanding when compared to others seen as their direct competitors and the industry as a whole. But it was from here that things became started to sour for Hills online.
Their percentage growth reduced dramatically in the next year as interactive operating profit for 2005 came in at £61.2 million which was followed in 2006 with profits of £61.5 million. In 2007 things got even worse as operating profit dropped below 2004’s levels at £50.9 million.
Despite having initially had a huge advantage over the nouveau riche crowd including bet365 and Sportingbet as well as the lesser-known and inferior like Paddy Power, Hills’ online operations were faltering. Enter the white knight from Israel.
The Honeymoon Period
It began so promisingly. The ‘combination of William Hill PLC’s online operations and certain affiliates of Playtech Ltd and other assets to create the leading European online gaming and sports betting business William Hill Online’.
In October 2008 Ralph Topping presided over what may prove to be one of the most significant moves of his lengthy tenure at William Hill. The coming together of Hills and Playtech provided the bookmaker with the chance to have what they and their nearest competitors had been so desperately looking for – a strong foothold in the online gambling market.
The deal was confirmed at the beginning of 2009 and Playtech took control of 29% of the business referred to as William Hill Online (WHO). Despite an initial slow start – which we can put down to adjusting to the new lifestyle – the relationship started to show real promise.
By the end of 2009 William Hill had increased active players by 31% and added 28% more new accounts which gave them a customer base of 1.3 million active customers across their online products. By January 2011 WHO was able to report that they had revenue in 2010 was 24% greater than 2009 while profits had increased by 22%. All was looking good.
Infidelity and Arguments
But just one month after publishing 2010’s positive results it became apparent there was trouble in paradise.
Being the worldly and experienced iGaming supplier that Playtech is, it can’t be uncommon for the company to receive regular advances regarding new deals and relationships. But when it came to their relationship with Ladbrokes, in the eyes of Hills their discussions went too far.
A statement was released on 22 February explaining that William Hill had taken out an injunction against Playtech that effectively stopped them from talking to Ladbrokes about creating a similar deal. Their reasons for doing so are understandable but there was a feeling of dirty laundry being aired in public – whether or not that was avoidable we will never know.
Following Hills very public show of strength they showed that they weren’t going to be the sort of partner content to play second fiddle and be pushed around. From here on, the relationship was never the same.
Both assured others that they continued to have a sound relationship but this charade didn’t even see the year out. In October the news emerged that 200 of WHO’s Tel Aviv staff had boycotted work after CMO Eyal Sanoff and others left the company. In order to calm things down Topping sent one of his right hand men Jim Mullen over to Israel who, according to The Sun, offered them each a month’s salary to return to work.
Not long after reports surfaced that William Hill had got the heavies in and had hired ex-Mossad intelligence officers to secure the WHO servers and look into any possible dodgy dealings. The suspicion at the time was the Playtech were planning on creating a rival business through another relationship.
More detailed accounts of the history of WHO are available but for the purposes of succinctness we must press on.
Irreconcilable Differences
For a while, the two companies were able to brush their disputes under the carpet and continued to profit from their relationship. In 2011 WHO was able to report a second year of 20%+ profit increase while 2012 saw it increase by an even more impressive 36%. It’s worth mentioning that that last figure should be taken with a pinch of salt given the array of large sporting events that took place last year.
But in October of last year Ralph Topping admitted that he and his company were unhappy with the current terms of the deal and that they would be renegotiating. As it turns out, this renegotiating has consisted of taking up their option to purchase Playtech’s 29% stake in the company. This amounts to £424 million – a figure we can consider to be a payoff so that Playtech doesn’t soil the great tradition of the William Hill family.
Despite being unstitched at the hip, this isn’t to be the end of the relationship between William Hill and Playtech. To begin with, they’ll be forever bound by their children who actually brought them together in the first place. The software deal between the two looks unlikely to ever change completely although the exclusivity element of it will vary.
Even though there has been plenty of trouble and tribulation along the way, it’s undeniable that the relationship has been mutually beneficial. Both are better off than when they started and if nothing else they can thank each other for the memories.
